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Central Banks and Supervisory Architecture in Europe

Lessons from Crises in the 21st Century

9781802208887 Edward Elgar Publishing
Edited by Robert Holzmann, Governor, Oesterreichische Nationalbank, Austria and Fernando Restoy, Chairman, Financial Stability Institute, Bank for International Settlements, Switzerland
Publication Date: October 2022 ISBN: 978 1 80220 888 7 Extent: c 256 pp
With Covid-19 and other recent crises proving the need to review the state-of-play and implement robust institutional frameworks in the complex, heterogenous and decentralised European financial supervisory architecture, this insightful book outlines what can be done to innovate the current set-up in the face of pressing issues like climate change, BigTech and crypto assets.

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Critical Acclaim
Contributors
Contents
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With Covid-19 and other recent crises proving the need to review the state-of-play and implement robust institutional frameworks in the complex, heterogenous and decentralised European supervisory architecture, this insightful book outlines what can be done to innovate the current set-up in the face of pressing issues such as climate change, BigTech and crypto assets.

Revisiting the debate on financial sector oversight in Europe, a range of highly acclaimed international academics and influential policymakers discuss the scope of institutional arrangements. Chapters examine how the architecture of European financial supervision currently works, analysing the trends in banking supervision design and the influence that recent financial and economic crises have exerted. Providing a rare insight into the role that central banks play in the supervisory set-up, their accountability and democratic legitimacy, the book also considers the ways that macro- and micro- prudential and monetary policies interact. Gleaning lessons from the FinTech revolution and the Covid-19 crisis, the book ultimately concludes by seeking a path for optimal architecture for European financial supervision.

With invaluable industry insights, this cutting-edge book will prove vital to academics in the field of financial economics and financial regulation, alongside policymakers looking to transform their current supervisory architecture.
Critical Acclaim
‘This volume provides a comprehensive and indispensable opportunity to take stock on the achievements and challenges of European banking supervision after the momentous reforms of the early 2010s, and on the related debates about financial supervisory architecture. While the complexity may at times appear dizzying, it is an important story whose policy lessons have relevance well beyond the boundaries of the euro area and European Union.’
– Nicolas Véron, Bruegel, Belgium and the Peterson Institute for International Economics, US
Contributors
Contributors include: Ignazio Angeloni, David Archer, Charles Bean, Thorsten Beck, Anne Epaulard, José Manuel González-Páramo, Daniel Hardy, Karin Hobelsberger, Robert Holzmann, Aerdt Houben, Jan Kakes, Christoffer Kok, Angela Maddaloni, Donato Masciandaro, Francesco Paolo Mongelli, Luis Silva Morais, Annelie Petersen, Anca Maria Podpiera, Fernando Restoy, Phurichai Rungcharoenkitkul, Alessandro Diego Scopelliti, Paul Tucker, Maarten van Oordt

Contents
Contents:

1 Introduction to Central Banks and Supervisory Architecture
in Europe 1
Robert Holzmann and Fernando Restoy

PART I TRENDS IN EUROPEAN BANKING
SUPERVISION DESIGN
2 The puzzle of Europe’s banking union: progress and missing pieces 14
Thorsten Beck
3 Supervisory architecture in the EU: where should we go from here? 21
Fernando Restoy
4 The architecture of supervision and prudential policy 34
Angela Maddaloni and Alessandro Scopelliti
5 Trends in European banking supervision design: is there
a path to an optimal architecture for financial supervision in
the EU? 49
Luís Silva Morais

PART II THE ROLE OF CENTRAL BANKS
(I): ASPECTS OF MONETARY AND
MACROPRUDENTIAL POLICY INTERACTION
6 Can macroprudential tools ensure financial stability? 62
Anne Epaulard
7 The interaction of monetary and financial tasks in different
central bank structures 71
Aerdt Houben, Jan Kakes and Annelie Petersen
8 Monetary and macroprudential policies: a troubled marriage 83
Phurichai Rungcharoenkitkul
9 The architecture of macroprudential policy: delegation and
coordination 96
Charles Bean
10 Governance of financial sector policies in an era of climate change 108
Daniel C. Hardy

PART III THE ROLE OF CENTRAL BANKS (II):
MICROPRUDENTIAL SUPERVISION AND
FINANCIAL STABILITY
11 Entrusting central banks with microprudential supervision:
implications for financial stability 122
Anca Maria Podpiera
12 Is this time different? Synergies between ECB’s tasks 135
Karin Hobelsberger, Christoffer Kok and Francesco Paolo Mongelli
13 Money, supervision, and financial stability: a money-credit
constitution entrusted to independent but constrained central banks 156
Paul Tucker
14 Politicians, central banks and macroprudential supervision 170
Donato Masciandaro

PART IV THE FINTECH REVOLUTION: IMPLICATIONS
FOR OPTIMAL SUPERVISORY ARCHITECTURE
15 Regulating and supervising BigTech in finance 181
José Manuel González-Páramo
16 The emerging autonomy–stability choice for stablecoins 194
Maarten R. C. van Oordt

PART V LESSONS FROM THE COVID-19 CRISIS FOR
THE OPTIMAL SUPERVISORY ARCHITECTURE
17 Some lessons from COVID-19 for the EU financial framework 206
Ignazio Angeloni
18 Central banks as emergency actors: implications for
governance arrangements 218
David Archer

Index
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